Merchant fees are charges that merchants pay to the merchant services provider when customers pay using their credit and debit cards. Merchant fees are unavoidable for anyone running a business and accepting payments electronically. Many business owners do not fully understand the various fees associated with merchant services and this can cause unnecessary financial burden. In this article we will cover everything you need to know about merchant services fees.

Transaction Fees:

Transaction fees are the most common type of merchant service fee. These fees are charged every time a payment is processed. The fees are usually a percentage of the transaction amount and a fixed amount per transaction. The percentage rate varies from provider to provider and is typically between 2-3% while the fixed fee is usually around 25-50 cents. It’s important to know that transaction fees can vary depending on the type of card being used, the method of payment, the amount of the transaction, and the merchant’s business category.

Monthly Fees:

Monthly fees are another type of merchant service fee. These fees are charged on a monthly basis for the use of merchant services. The fee amount varies by provider and can range from $10 to over $50 per month. This fee is often called a “statement fee”, “account maintenance fee”, or “gateway fee”. Monthly fees are not necessarily a bad thing if the provider offers additional services that can help grow your business.

Chargeback Fees:

Chargeback fees are merchant service fees charged when a customer disputes a transaction. A chargeback occurs when a customer disputes a purchase made with their credit card or debit card. The customer files a dispute with their issuing bank, and the bank contacts the merchant's acquiring bank requesting a refund on behalf of the customer. Chargeback fees range from $15 to over $100 per chargeback, depending on the provider. Protecting yourself against chargebacks can save you money and reputation.

Early Termination Fees:

Early termination fees are charged when a merchant cancels their contract with their merchant service provider before the contract period is up. Although providers charge different amounts and apply different terms, early termination fees can be extremely costly, often totaling over $500! Some providers also require a notification period, so it’s important to read the fine print of your contract. This can help you avoid unnecessary fees and headaches later on.

Conclusion:

Merchant services fees can add up quickly, but it’s essential to understand what you’re paying for. By doing your research, you can find the provider that best fits your business's specific needs. Understanding the various fees and costs involved can also help you identify areas where you can reduce costs. Ultimately, investing in the right merchant services provider can help grow your business and provide your customers with a seamless payment experience.